(Editor’s note: I have heard that some readers felt I was papering over the East India Company’s utterly horrific rule and not according it the condemnation it deserves. I apologize for giving that impression. I also may have made it more clear why I mentioned the East India Company at all. I’ve made some changes in the post that I hope will correct these issues.)
I was privileged to be invited, along with a number of my colleagues and friends, to be a guest of Zoho at their Chennai, India HQ last month. The goal for this short week packed tight with meetings and presentations – and meals and conversations –was to imbue in our hearts and minds a sense of what makes Zoho tick at its most foundational level. We talked to customers, employees, students in their amazing, ground-breaking schools, executives at the parent company as well as employees working at spinoffs making electric farm vehicles and medical equipment, among others.
Imbued we were. (Emphasis on the “we”: This post is only one of many to come out of this trip. I highly recommend looking at the rest; you’ll find their links at the bottom of this post.)
What emerged was a view under the hood of a company that is trying to break the enterprise software company mold in myriad ways. I’ve known about what the tip of the iceberg looks like for some time, but getting the full view of the enormity of what’s hidden under the surface made it clear there’s a lot more to Zoho than meets the eye. Much much more.
First, some context. India is unique for many reasons – the world’s largest democracy, the soon-to-be most populous country in the world, a multi-culti extravaganza defined by literally hundreds of different languages and individual cultures, and a country possessed with a paradoxically highly-advanced economy based on a per capita GDP that’s one-fifth that of the United States.
It’s also a country with a fascinating economic history: the only major country on the world stage today that was literally created by a company – the British East India Company. But not just any company: John Company, as it was called, practiced a shockingly avaricious form of capitalism that would stop at nothing to achieve its aims. The Company, fielding an army that at times numbered over 250,000 men, operated as a cruel and sadistic despot as it shamelessly looted the country with no regard for the lives and well-being of India’s people. Its strategy of inflaming communal and caste differences, and its successes in the battlefield and in the halls of power, allowed John Company to impose its will over the region for over a century.
The fact that a country born from the worst possible example of totalitarian capitalism could also be the crucible for a refreshingly benevolent 21st century rethinking of the role of a for-profit company is fascinating. Though those of us who have followed Zoho for a while had seen various aspects of this new way of thinking, having the opportunity to observe it up close brought the concept home, particularly as the impact of what was effectively a 100-year holocaust against the people John Company purported to rule can still be found.
But this is more than just a rewiring of historical models: Zoho is trying to carve its place in the enterprise software market of today as more than just a software company trying to make its founders and investors rich, and maybe, just maybe, do good by its employees too.
Indeed, Zoho strives to be the very antithesis of that unfortunately dominant image of enterprise software success, even as it strives to be a company that provides the “operating system” of business that many of its larger and more successful peers have attempted to, and so far failed to, truly offer. It’s also striving to be a company that offers genuine customer success; not the kind that’s really investor success masquerading as customer success. And Zoho wants to offer an almost unprecedented degree of employee satisfaction; not the performative ohana kind of employee satisfaction that’s kicked to the curb when the customers most vendors really care about, their investors, start getting anxious about quarterly margins.
That’s a tall order for any company that offers a unique perspective on things like people and profits, while focusing on the details that go into delivering quality products and services that aren’t just “good enough,” but can contend with the best of the best on a relatively equal footing.
Zoho, by bucking the dominant paradigm of enterprise software, will have to struggle to be heard above the noise that the incestuous, VC-led Silicon Valley tech bro culture can generate. Witness the nonsense major SV players have been pumping out about blockchain and crypto, the metaverse, ChatGPT, and other overhyped concepts, most of which quickly become“technology” in search of a problem to solve as well as an unwelcome and costly diversion from finding real solutions to real problems. Selling plain old vanilla value and customer success – which is fundamentally what Zoho is focused on – is a particular challenge when our click-bait, SEO-driven social media and tech hype machines are hardwired to drool whenever the latest sexy/cool/disruptive tech bell rings.
The fact that India has emerged from its unfortunate history as the financial and cultural powerhouse that it is today is as much as testament to the durability of its cultures as it is to the industriousness of its citizens. That industriousness is important to note. On my peregrinations around Chennai, India’s 4th largest city, on foot (perilously) and in motorized rickshaws, or tuk-tuks (thrillingly, though no less perilously,) I saw an amazing entrepreneurial spirit acting at a micro-economic level as impressive for its infinitely small scale as it is for the scope of its goods and services. In most streets in Chennai, pretty much every square inch of space – storefronts, sidewalks, roadsides – is occupied by some man or woman making/selling/offering a smorgasbord of goods and services for the city’s five million inhabitants. You can buy all manner of food, get your shirts ironed, get your car or motorcycle fixed, watch furniture being built, buy fashionable clothing and footwear all while walking along or navigating many of the city’s crowded, horrifically polluted streets.
A large part of this industriousness is fueled by the country’s impressive micro-payment infrastructure. The payment system is built on top of a transaction infrastructure run by the Indian central bank, a system that supported 8 billion transactions in January alone. Importantly, the bulk of those transactions were micro-payments to all those small, roadside and market vendors clamoring for customers. (By comparison, Visa reported processing 192 billion transactions in 2022, across 160 currencies: If you annualize India’s January volume the total is basically 50% of the of Visa’s worldwide transaction volume, despite India representing only 15% of the world’s GDP.)
This complexity – India is a maelstrom of modernity and technology, poverty and infrastructure challenges, deep-seated entrepreneurialism and non-traditional thinking, all bound up in a new/old mix of cultures that make it a hub of diversity like no other – is the bedrock on which Zoho has built its products and its business philosophy.
Having spent a short, intense week visiting Chennai, I can now see Zoho’s worldview, and its raison d’être, also goes beyond its rethinking of the business of enterprise software. The world according to Zoho requires a complete rethinking of the role of business in society, moving it away from the free-marketpolices of Milton Friedman and the like on the one hand and the self-serving “stakeholder capitalism” and “effective altruism” that is the foundation of modern tech bro business philosophy on the other.
What’s in the middle – the Zoho Way – can be found in a soon to be published “manifesto” on the company’s philosophy. Authored by chief strategy officer Vijay Sundaram, the manifesto is remarkable as much for its reimagining of what a software company can be as it is for its repudiation of what a huge swath of Big Tech has become over the last 30 years.
This is why Zoho is investing in – and practicing on its campuses and properties in the US and India – regenerative agriculture. Zoho’s efforts are in sharp contrast to the legacy of Silicon Valley, which was built on the bones of former orchards long-ago forgotten and forever poisoned by chemical waste from the semi-conductor production that kick-started everything.
But Zoho’s focus on ag isn’t about redeeming the sins of Silicon Valley, it’s part of a larger, more deliberate plan that comes in part from a fascinating book, How Asia Works. Written by veteran Asia watcher Joe Studwell, the book laboriously analyzes why some Asian countries, like South Korea, Taiwan, and China, “produced the quickest progressions from poverty to wealth that the world has ever seen.”
Importantly, agricultural development was one of three main engines of growth Studwell found when he analyzed growth in Asia in the post-World War II era. By developing local, small-farm agriculture, Asia’s successful countries were able to speed up overall economic growth significantly: Farming at that scale, Studwell found, can gainfully employ the greatest number of people and theoretically produce surpluses that in turn develop demand for further consumption of goods and services.
Manufacturing, Studwell’s second engine for growth, allows semi-skilled workers to create valuable products “that can be easily be purchased on the world market,” which can help bring in an infusion of foreign capital and raise standards of living. Studwell places a special emphasis on “export discipline” in this regard. It’s not enough to build just for the local market, however vast (in India’s case) it might be: the product has to be able to compete on global markets or, in Studwell’s view, the investment in manufacturing is wasted.
Seeing this thesis in action is why our visit to Zoho included a peek at a medical equipment manufacturing company on campus – a spinoff that is producing, among other things, an infusion pump that can pass FDA muster and come in at one-third the price of a competing machine. And in a happy marriage of ag and tech manufacturing, Zoho has seeded a company that is bringing to market a low-cost electric 4WD ATV with a hydraulic flat bed and a limited self-driving capability that will be at home on any farm. (The ATV handles pretty well, with tons of torque and a nice, stiff suspension. Might have to buy a farm just to have the excuse to own one.)
The third discipline for growth requires a focus on capitalizing these kinds of small-scale businesses, agricultural and manufacturing in nature, to support “the fastest possible technological learning, and hence the promise of high future profits, rather than on short-term returns and individual consumption.” This can come at the cost of short-term profitability and a consumption-oriented economy, Studwell argues, and therefore is in opposition to business models that are driven by Wall Street’s appetite for quarterly profits and growth at all costs, at the expense of long-term value, employee satisfaction, and ultimately, customer success.
Here is where Zoho makes its biggest break with the structure of the enterprise software companies with which it competes. It not only is seeding small companies like the ones we toured, it’s effectively seeding itself with a philosophy that eschews the short-term profitability and growth-at-all-costs mindset that Studwell calls out as misguided. Zoho is privately held, and exceptionally employee focused (free meals for all on campus, including construction workers and their families, if they wish, as well as onsite access to healthcare, among other benefits) with a no layoffs policy that it takes extremely seriously. It is easy to see how well-treated the employees are, and how appreciative they are of the opportunities Zoho has given them: it’s no shock that many people we met have been at the company at least 10 and even 20 years or more.
Zoho is also rethinking how to “master demographics,” as co-founder Sridhar Vembu told us. In a country where a huge majority lacks access to tech, Zoho has to build its own pipeline for training new employees and help seed the rural development that is a cornerstone of its philosophy. That’s why Zoho runs its own schools in rural areas as well as in Chennai, including programs for mothers returning to the workforce and support for non-traditional and neuro-divergent learners. And that’s why Zoho is building satellite offices in places like McAllen, TX, population 140,000, tucked way down in the southeast corner of Texas, as opposed to Silicon Valley, which it sees as full of tech workers “building resumes” instead of looking for a long-term commitment to a single company.
McAllen in that regard is perfect: it has a well-considered community college and, according to Zoho, a population that tends to stick around – something a company like Zoho obviously sees as an ideal place to find talent. As chief evangelist Raju Vegesna puts it: “There are stones there that haven’t been discovered, but if you polish them they shine like diamonds.”
Polishing diamonds is an apt metaphor for Zoho in the coming years. The company has done a great job putting out a solid suite of products across so many domains that it’s almost easier to list what the suite doesn’t cover. And it seems like every time I think if something else that’s missing, such as ERP, warehouse management, and the like, it turns up on the roadmap or on the GA schedule for next quarter.
Nonetheless, there is further polishing that needs to be done, some internal and some external, particularly as the company looks to move up the food chain into the upper midmarket, where its name recognition is scarce and the competition intense. That competition sports bigger marketing budgets and big game-hunting enterprise software sales execs prowling the halls looking to win a deal at all costs: Too many of them would sell a customer just about anything, including up the river, to make or exceed quota. It’s a model that unfortunately works, particularly if the ultimate customer is the investor community and not the real customers stuck figuring out how to deal with the mess. It’s an interesting challenge: Zoho will be up against companies that have embraced the very model Zoho is trying to usurp.
Clearly Zoho can’t and won’t compete in this fashion, so the trick will be to find that Zoho Way that turns the model on its head. The good news is that Zoho’s leadership has a strong sense of how to grow the company, their country, and even towns like McAllen, TX, in ways that do the best job possible for all without kowtowing to received wisdom about how capitalism works best. Coming from a company whose country experienced the absolute worst of capitalism, that’s a helluva legacy, if you ask me. The Zoho Way has brought the company past the $1 billion mark without sacrificing its soul. How well it succeeds in pursuit of the next billion or two will be a story well worth the telling.
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A compendium of TrulyZoho23 posts and videos:
David Smith of InFlow Analysis speaking to Raju Vegensa Live about the challenges of tech live from Chennai: (20) LinkedIn
Michael Fauscette of Arion Research’s blog post nails the spirit of the visit in beautiful pictures and prose: Truly Zoho — Arion Research LLC
Thomas Wieberneit of AheadCRM’s blog post tells us about property as an obligation and public benefit in: Truly Zoho – How capitalism and doing right coincide (aheadcrm.blogspot.com)
Thomas also interviewed Vijay during the visit. Culture is the most enduring form of capital – YouTube
The CRM Playaz, aka Paul Greenberg and Brent Leary, had a bunch of us on their show to discuss the experience and show how a good time was had by all: (20) LinkedIn
Brian Sommer graced the pages of Diginomica with this take on Zoho, culture and the road ahead: A passage to India – the essence of Zoho (diginomica.com)
Jeremy Cox waxes eloquently on transcendence and Zoho’s soul in (20) The path less traveled Values and ownership give Zoho a sustainable advantage | LinkedIn
Vinnie Mirchandani recaps his recaps on the Chennai trip: deal architect : Truly Zoho recap (typepad.com)
Phil Wainewright uses an analysis of the Zoho Way to take a swipe at the hyperscalers Are we paying the hyperscalers too much for public cloud? Zoho thinks so (diginomica.com)
Ryan Lo, a local high school and son of our hostess, Sandy Lo, interviewed the head of Zoho Education for his amazing podcast, A Change is a Chance (on which I was once a guest too. As usual, Ryan asks great questions and get great answers: https://podcasters.spotify.com/pod/show/ryan-lo/episodes/Episode-26-The-Drawbacks-of-Traditional-Higher-Education-and-an-Equitable-Alternative-e1vpot4
Excellent post – THANK YOU – please keep updates on Zoho coming.
Hope you are doing well!
Will do, there’s a lot to say about them. Thanks.